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The ISDC’s latest debarment report to Congress raises more questions than it answers

On January 15, the U.S. Interagency Suspension & Debarment Committee (ISDC) sent its annual report on the status of the federal suspension and debarment system to Congress. In addition to reporting the FY19 suspension and debarment metrics, the report also highlights other important developments in the U.S. suspension and debarment regime.

After reviewing the report, two key issues stood out to me: metrics and harmonization.

With respect to the FY19 metrics, the ISDC deviated from past practices by including only FY19 and FY09 metrics in the report (previous reports have included numerous other years’ metrics in order to demonstrate year-to-year changes).

As a general rule, I tend to dislike the emphasis that some stakeholders place on annual metrics. As the ISDC notes in the report, “the number of suspensions and debarments fluctuate from year to year as such actions are considered and used as necessary to protect the Government’s business interests.” For that reason, placing too much emphasis on a particular year can lead to distorted inferences.

At first glance, it appears that the ISDC is trying to make this same argument by only including data from FY19 and FY09. Instead of focusing on minor changes in annual metrics, the comparison between FY19 and FY09 enables readers to see long-term trends and improvements in the system.

But…..if you actually look at the data from 2014-2019, that’s not exactly what’s going on here.

First, you have the chart from the new FY19 ISDC report:

If you compare 2009-2019, there has clearly been an increase in the use of these tools. Now let’s take a look at the metrics as if the ISDC had followed the same protocol as it used in prior years and included the previous years’ metrics (I created the charts below):

Definitely a noticeable downward trend in debarments and proposed debarments, whereas suspensions had an uptick in FY19 after four consecutive years of decline. Perhaps these trends can be explained by the use of other remedies, such as pre-notice letters (“show cause” letters) or administrative agreements? After all, these are additional tools in a Suspension & Debarment Official’s (SDO’s) toolbox that help protect the government without triggering the drastic consequences of suspension or debarment.

Here is the ISDC’s chart from the FY 2019 report:

Now here are my charts:

Although the decline is not as stark as it is with debarments and proposed debarments (and suspensions, pre-FY19), there is still another downward trend. Which begs the question – what’s going on?

Has there been a decline in misconduct? That’s probably unlikely (as evidenced by FY19’s sudden uptick in suspensions). Are agencies using these tools less frequently than they have in the past? That’s certainly the inference that most stakeholders may take away from this data. Although I am certainly not advocating for more debarments (more ≠ better), the data does raise more questions than it answers.

If the purpose of the U.S. suspension & debarment system is to protect the government, then stakeholders need to know whether agencies are doing what is necessary to protect the government’s interests. Sometimes, that means an exclusion. In other instances – an administrative agreement or show-cause letter. And yes sometimes, it may also mean taking no action.

But it is hard to tell whether the suspension and debarment regime is adequately protecting the government’s interests when the data shared with the public can’t answer these basic questions. As David Robbins and Rod Grandon point out in their recent article:

“We believe the government should offer meaningful metrics to measure the success of the suspension and debarment system. The metrics should flow from the definition of present responsibility and any related policy directives as to how SDOs are to protect the government’s interests by assessing present responsibility. Metrics could then explain how and how well SDOs protect the government’s interests.”

I agree. Moreover, because there’s so little transparency into the debarment process (e.g., the causes for debarment are not published, administrative agreements – which are required by law to be published – are notoriously difficult to access), it is difficult to use anything but high-level metrics to assess the “success” of the U.S. suspension and debarment regime.

In sum, it’s not clear exactly why there has been a general decline in debarment-related activities, but without greater insight from the ISDC, people will draw their own conclusions. And we know what happens when people (especially, Congress) do that (see here and here).

In addition to the questions raised by the FY19 metrics, there is another notable development in the report: a purported effort towards harmonizing the procurement and nonprocurement (e.g., loans, grants) procedures on suspensions and debarments. Indeed, the report declares that a FAR case has been opened (see FAR case 2019-015) “which specifically focuses on improving the consistency” between Federal Acquisition Regulation (FAR) and Nonprocurement Common Rule (NCR) procedures in this area.

I applaud the ISDC and FAR Council’s efforts in this area. For years, U.S. debarment experts have decried the illogical lack of consistency between these two sets of procedures and called for reform. Although there are a host of inconsistencies between the two sets of procedures (as outlined in this article), one area of particular concern among the debarment bar is how the two procedures handle “Notices of Proposed Debarment.”

Under the FAR, a “Notice of Proposed Debarment” results in a contractor’s immediate exclusion from the U.S. procurement system. Conversely, a “Notice of Proposed Debarment” under the NCR is just that – a “notice.” The practical effect of this disparity is that if you are a contractor, a receipt of a “Notice” results in the immediate loss of future government revenue streams. Whereas if you are a grantee, you remain eligible for contracts while the proposed debarment is pending before an SDO.

The FAR provides SDOs with a tool to immediately exclude contractors who pose an imminent threat to the procurement system: suspension. So it’s unclear why the drafters of the FAR rule felt it necessary to inject such draconian consequences into the “Notice of Proposed Debarment” procedures.

Although the government has not disclosed which aspects of the FAR and NCR suspension and debarment procedures it is examining, one can assume that this particularly nonsensical and troubling discrepancy in the rules has been targeted by the ISDC and FAR Council as an obvious candidate for reform.

I have long extolled the virtues of the U.S. suspension and debarment regime. But even though it is one of the most sophisticated debarment systems in the world (and a model for emerging debarment regimes across the globe), there is still room for improvement. Taking meaningful steps towards addressing the concerns raised in this piece (and others) will ensure that the debarment remedy remains one of the most important and successful tools used to protect the integrity of the U.S. procurement system.

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